Techdirt Experiments With A Formula That Could Save The Music Industry

CwF + RtB = $$$

Connect with Fans (CwF) and give them a Reason to Buy (RtB)

In January, Mike Masnick of  the Techdirt blog introduced the formula CwF + RtB = $$$ during his great presentation at MidemNet on Trent Reznor's successes with social networking, listening to fans and offering a variety of packages at different price points to service the broadest spectrum of his fan base. 

Other artists have since applied similar strategies to sell to their fans and Masnick realized that he was on to something. "That simple formula has resonated incredibly well, to the point that I'm receiving emails daily about it specifically — and not just in the music industry, but many other industries, asking how they can apply it themselves," says Masnick. "After doing all those presentations…

some of us here at Floor64/Techdirt got to talking about ways that they could be applied to other industries — and one thing led to another where we began to wonder why we didn't test them out ourselves. So, we looked at the various models and thought about what could we do along those lines.."

"I certainly love the "tiered" models, where there are numerous options of increasing value that people can buy into," continued Masnick, "and we figured, why not test that out ourselves?" 

Check out Techdirt's own experiment with CwF + RtB here.

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  1. Of course various companies in various industries have long offered packages of goods and services at different price points.
    The Techdirt experiment most reminds me of fundraising campaigns on PBS. If you donate this much, you get a membership and a newsletter. If you donate more, you get the membership plus a cup. If you donate at the next level, you get the membership and a CD.
    And so on.
    I’ll be interested in seeing the results, but I can’t see how this is revolutionary or a new business model.

  2. Essentially the artists would be setting up and managing their own online retail site. Even though it’s hard for newer artists to cash-in with this model, it’s still better than nothing.
    I actually just visited MGMT’s website and they have a merch page with available shirts and accessories. Not as extensive as what the Beastie Boys are offering but it’s something. Hell, I may buy a shirt.

  3. Hi Suzanne,
    Thanks for the comment and the thoughts on our experiment (both on Techdirt and here). However, I’d suggest that the PBS fundraiser comparison is not particularly apt. In those cases, they are pretty much begging for support, and the value of what you get is far below what you contribute. So it’s like “give us $50 and you get a cup.” No one would buy a cup for $50.
    In our case, we focused very much on making sure that you were buying something of real value — and the point is not to “support Techdirt” or “contribute” to Techdirt, but to find something you might really like and buy it, because it makes sense to you.
    Thanks again.

  4. Yup. It has been. And yet, so few seem to be willing to apply it properly. If they did, they’d realize there’s no problem at all in the music business.

  5. If pointing out to the music business that they need to get into the business of selling merchandise and additional services, then the music business really IS in dire need of reinventing itself.
    This means the music business, when it sells goods, is going to become another online retailer, with all that this implies. They will be going up against all the other online retailers. It’s no longer a music business discussion as such.
    I think it could well be the future, but I don’t see this as an innovation.
    I think the PBS model is more similar than Mike argues. If that cup has an exclusive design, who is to say that it isn’t worth $50? Bands are selling high priced t-shirts that you can only get through them.
    It’s all about branding and retailing. And there’s a lot of info out there about that.
    By pointing out we are no longer limited to the realm of music, we open up a lot more research for people to read. If you want to sell goods and services, look to the companies that are doing this.

  6. This all seems accurate to me, but over-simplified. Ok, I buy the equation, but the devil is in the details. How do you achieve either one of those platitudes (or how does an Artist do it)? I’m not a hater, mind you. But for anyone in the music biz, they have known this equation instinctively for some time.
    Can the author or Mr. Masnick unpack those ideas into something actionable? Obviously, it isn’t as simple as subscribing to the techdirt service. Or is that what Mr. Masnick is claiming?
    Again, I am just a questioner here, withholding judgment until I see the actionable parts. I’d love to hear more.

  7. “But for anyone in the music biz, they have known this equation instinctively for some time.”
    That’s why I have been so nitpicky about this concept. Bands have been selling stuff, and doing live shows, in some variation for years.
    The issue has never been that bands don’t know about it. It’s just that it’s a whole other business than making and recording music. Some people just want to make music, and others don’t have the resources to expand into all these other areas.
    If you have been in the day-to-day business of running a band, you’ve already been in these discussions.

  8. I think calling it a “model” is generous. Again, this is as a basic business principle wearing a different guise. All this says is create a compelling product and sell it to the people who want it. Yeah, duh.

  9. I agree with Andrew. I was going to put up a “duh” comment as well, but since some folks think I’m trying to be difficult in questioning the insight in all of this, I decided not to.
    To be more charitable, let me say, I’m eager to see whatever sales data anyone generates with these models. Tell me what is selling, in what quantities, and who is buying. I always find such info useful.

Comments are closed.